1) Phil's Financial Tip of the Day:
Budgeting is easier than it seems-check out this family.
Dallas Mom: How We Live on 40K a Year Without Coupons-From Financially Fit
I'm really not all that different from other moms. I take care of my home, my husband, my young son, as well as all the shopping and the family budget, too. What might make our family a little different from others is that we manage to live very comfortably without going into debt, and do so with only my husband's income of approximately $40,000 per year. Here's how we do it:
Budgeting
We've learned that budgeting is easier than it seems. We make automatic deductions for our basic expenses, such as mortgage, utilities, car payment, and insurance — we even set a small amount aside for charity — and what's left over gets split into two savings accounts: our emergency fund, and an account for our son (college, Christmas presents). My husband and I use a basic budgeting template from Excel and have adjusted it to our own needs — in fact, we adjust it every month depending on priorities. By acting responsibly before disaster strikes, we feel safeguarded against the unexpected.
We Don't Deny Ourselves
We also leave room for fun stuff by delegating a small amount for discretionary spending each month — this can go for household items, clothes, vacations, etc. It's stuff we don't need, but want. If there's something we have our eye on, we simply save up for it. It might take us a little longer to get it, but we try not to deny ourselves of life's simple pleasures. By managing our "wants" like this, we avoid impulse purchases and overspending.
Eating Well, For Less
When we first got married, I couldn't cook at all, but now I cook all the time! Cooking allows us to meet our food budget each month, a total of only about $20 per person, per week. We can't afford to buy everything organic, but since I make my own organic baby food, I jump on those deals when I see them! I also shop wholesale at Costco for bulk items (flour, sugar, cheese), and then get my basics (milk, eggs, bread) at whichever local store has the best deals that week. Surprisingly, I don't use coupons. Instead, I'm diligent about planning out our meals each week so we don't waste a morsel. Another way we save (and have fun!) is to invite friends over — if I cook an entree and they bring the sides, we've just cut our dinner costs in half!
DIY Designer Deals
Back when we had two incomes, I enjoyed decorating my home and wearing designer labels. Now, neither would be possible if I didn't think outside the box. My interior-designer mother has taught me how to choose high-quality fabrics to sew my own curtains, pillows and to re-upholster cushions. I even attempted a quilted headboard for the bed (for about $100 — a savings of nearly $300). We also saved about $1,000 on a 10x12 area rug for our bedroom by purchasing a large remnant at a rug store and having it bound. When I shop, I seek out consignment shops where gently worn couture costs about 60% less. I still have to watch my pennies, but I believe that a few high quality pieces are a better investment. Finally, I do all my own hemming and mending for my family. It saves me about $5 to $10 per sewing job. A small task like this add up!
Working it Out
As a trainer, fitness is important to me. Yet, we got rid of our gym memberships, which saved us $50 a month. We found that we were only going about twice a week anyway — now, I'll take my son out in his jogging stroller or complete workout tapes at home. Guess what? I don't miss it at all!
The Rewards
By budgeting and spending wisely, I've been able to stay home with my young son and provide the loving, personal attention we believe he needs. Secondly, we continue to invest in our futures. My husband is planning to start law school next fall and, thanks to our diligent savings practices, we know our family can handle this financial challenge. Thankfully, Matt and I were raised by financially savvy parents that taught us the value of money and how to practice financial self-control. We plan to pass these same lessons on to our son — and to continue to inspire others to do the same!
2) In the Markets today:
U.S. stocks dropped, sending the S&P 500 back into the red for 2011.
S&P 500 Back to Loss for '11-From The Wall Street Journal
U.S. stocks dropped, sending the Standard & Poor's 500-stock index back into the red for 2011, as the euro sank to an 11-month low and investors fretted about Italy's long-term debt auction on Thursday.
The Dow Jones Industrial Average shed 139.94 points, or 1.14%, to 12151.41, and the S&P 500 gave up 15.79 points, or 1.25%, to 1249.64. The S&P 500's decline pushed the broad market measure back into negative territory for the year, with just two full days of trading remaining in the year.
The technology-focused Nasdaq Composite fell 35.22 points, or 1.1%, to 2595.
All 10 sectors of the S&P 500 and all 30 Dow components were lower. Financials and materials stocks fell mostly sharply. Cliffs Natural Resources, Freeport-McMoRan Copper & Gold and Nabors Industries each lost 4% or more to lead the S&P 500 decliners.
Among Dow components, Bank of America was the worst performer of the day, tumbling 3.6% to bring its slide for the year to date to 60%. Alcoa lost 3.1% and Caterpillar declined 2.4%.
Investors were pulling back from riskier assets ahead of an Italian auction of longer-term government debt on Thursday.
Before the opening bell Wednesday, U.S. stock futures pointed higher, boosted by a successful auction of short-term Treasury bills in Italy. Demand for Italian six-month bills increased from the previous auction, and the average yield of 3.251% was half of the 6.504% average, a euro-era high, paid a month earlier for the same maturity.
But that optimism faded as investors looked ahead to Thursday's auction, sending the euro lower and pushing yields for longer-term Italian debt higher throughout the U.S. morning. Italy's 10-year yield finished at 6.971%, just off the 7% threshold that economists consider unsustainable for fresh borrowings over the longer term.
Adding to the concern, the European Central bank's overnight deposit facility reached a second consecutive record, suggesting that banks would rather park cash there rather than lend it to other banks.
Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management, said that while Wednesday's auction of short-term Italian debt was strong, it may have taken some buyers out of the market for the more important auction for longer-term debt slated for Thursday.
"People are hugging the shorter end of the yield curve," he said. "There's a fear that the demand for the shorter-dated securities is a substitute for demand for the longer-dated securities."
European markets reversed their midday gains Wednesday to trade broadly lower. The Stoxx Europe 600 finished down 0.7%, and Germany's DAX index gave up 2%.
The euro fell to $1.2934, sliding 1% for the session and hitting levels not seen since January. Against the yen, the euro sank to a 10-year low.
As traders fled the common currency and other risk-sensitive assets in thin holiday markets, the dollar was boosted against nearly every major currency except a broadly stronger yen.
However, some investors warned that thin markets tend to exacerbate price movements during year-end trading. Just 2.3 billion shares changed hands in New York Stock Exchange composite volume, a touch above the 2 billion shares traded on Tuesday—the quietest full trading day of 2011.
"It's a low-volume day with just the skeleton crews around, so small moves are accentuated," said Robert Pavlik, chief market strategist at asset-management company Banyan Partners. Even so, he added: "Breaking that technical line of $1.30 has really caught people's attention."
Gold futures tumbled more than 2% to $1,562.90 a troy ounce, the lowest mark since July 12. Silver slumped 5.2% to its Jan. 27 low. Crude-oil futures fell nearly 2% to below $100 a barrel. Heightened demand for Treasurys sent the yield on the benchmark 10-year note back below 2%, at 1.913%.
In corporate news, shares of Cavium lost 1.2% after the semiconductor products maker lowered its revenue and gross margin outlook for the fourth quarter.
New York Times slipped 1.2% after the media company said it agreed to sell the 16 local newspapers that comprise its regional media group, for $143 million in cash, to Halifax Media Holdings.
3) Top financial story of the day:
This was supposed to be the year of the IPO comeback. It wasn't. About two-thirds of companies that went public in the U.S. now are trading below their IPO price. However 2012 could be different thanks to Facebook.
Facebook to Lead Biggest U.S. Internet IPO Year Since 1999-From Bloomberg
Facebook Inc. and Yelp Inc. are set to lead the biggest year for U.S. initial public offerings by Internet companies since 1999, testing demand for IPOs after investors lost money on Zynga Inc. and Pandora Media Inc.
With Facebook considering the largest Internet IPO on record and regulatory filings showing that at least 14 other Web-related companies are planning sales, the industry may raise $11 billion next year, according to data compiled by Bloomberg. That would be the most since $18.5 billion of IPOs in 1999, just before the dot-com bubble burst.
While surging sales growth may lure investors to Facebook, the biggest social-networking site, heightened stock volatility (VIX)and Europe's sovereign-debt crisis could temper the pace of global IPOsZynga, the largest developer of games for Facebook, and online-radio company Pandora slumped following share sales this year, according to researcher Morningstar Inc.
"Technology is still a place where you can get outperformance in terms of growth against a tepid market backdrop," said David Erickson, New York-based global co-head of equity capital markets at Barclays Plc. "You might see more IPOs emerge if we get resolution in Europe or stability that makes investors more comfortable with the overall market."
Global Performance
IPOs raised $155.8 billion in 2011, compared with $252 billion a year earlier, and U.S. initial offerings generated $38.8 billion, about 10 percent less than in 2010, Bloomberg data show. In Asia, IPOs this year have raised $79.2 billion, less than half the $176.5 billion last year, Bloomberg data show.
While funds raised in Europe rose for the year, they sank more than 95 percent since August from a year earlier after the worsening debt crisis and a cut to the U.S. credit rating sapped confidence in global markets.
Morgan Stanley (MS) took the biggest share of both U.S. and global IPOs for the second year in a row after working on initial share sales by Glencore International Plc, HCA Holdings Inc. and Michael Kors Holdings Ltd. Pen Pendleton, a spokesman for New York-based Morgan Stanley, declined to comment.
The bank also was the lead underwriter on Zynga and Pandora's IPOs. The stocks' declines following those public debuts may prompt greater scrutiny of valuations in 2012, said James Krapfel, an analyst at Morningstar in Chicago.
"Investors will take a harder look at the numbers going forward and need to see strong revenue and profit growth," Krapfel said. Bookings, an indication of deferred revenue, at Zynga have increased more slowly this year, suggesting the company's IPO price was too high, according to a Dec. 9 Morningstar report.
Zynga, Groupon
Zynga, which raised $1 billion in its IPO this month, has since fallen 2.5 percent after going public at a valuation three times that of rival Electronic Arts Inc., Oakland, California- based Pandora has plunged 36 percent since its June 14 IPO.
Facebook, based in Menlo Park, California, is examining a $10 billion offering that would value it at more than $100 billion, a person with knowledge of the matter said last month. Total sales at Facebook in 2012 may surge 52 percent to 62 percent from this year's projected $4.27 billion through increased ad revenue, according to Debra Aho Williamson, an analyst at EMarketer. Industrywide, the display ad market may surge 24 percent to $12.3 billion this year.
Yelp, ExactTarget
"Tech offerings generally offer real growth, and investors get very excited when they can't find growth in the broader market," JD Moriarty, New York-based co-head of equity capital markets for technology in the Americas at Bank of America Corp., said at a briefing this month.
Yelp, the consumer-review website operator, and e-mail marketer ExactTarget Inc. both filed for IPOs in November. This year, 19 Internet companies generated $6.6 billion in U.S. initial share sales.
Glam Media Inc., a Web-advertising company that targets women, plans to make its first IPO filing by the end of the second quarter, people familiar with the matter said on Dec. 14. AppNexus Inc., the online-ad company backed by Microsoft Corp., may go public in late 2012, Chief Executive Officer Brian O'Kelley said in September. Companies like MobiTV Inc. and Eloqua Ltd., which rely on the Internet to distribute cloud- based software products to clients, may seek an additional $650 million, regulatory filings show.
Europe's Woes
In Europe, the IPO market has "essentially come to a halt" as the sovereign-debt crisis spread from Greece to Portugal and Italy, said Mary Ann Deignan, New York-based head of equity capital markets for the Americas at Bank of America. In September, Siemens AG suspended an IPO of its Osram lighting unit and Spain pulled the initial public offering of its lottery operator as global stocks headed for a one-year low.
"There are companies that would like to go public, but are waiting for the right market environment to do so," said Deignan, speaking at a briefing this month. "As long as policymakers and politicians control the headlines, Europe remains a challenge."
RIB Software AG (RSTA) raised 145 million euros ($189 million) in February, this year's biggest technology IPO in Western Europe. Yandex NV, owner of Russia's most popular Internet search engine, raised $1.4 billion in a U.S. IPO in May, while VKontakte, the largest Russian social networking website, also may sell shares in New York next year, people with knowledge of the matter said in June.
Months Behind
"The IPO market in Europe is probably six months behind where we are in Asia and the U.S.," Brad Miller, New York-based global co-head of equity syndicate at Deutsche Bank AG, said at a briefing this month. The first pickup of stock-sale activity in Europe may come as governments sell state-owned assets to the public through spinoffs, Miller said.
Still, even in Hong Kong, where growth from mainland China will spur demand, a busier calendar may not come until the second half, said John Lydon, co-head of Asia equity capital markets at Deutsche Bank.
Chow Tai Fook Jewellery Group Ltd. and New China Life Insurance Co. both fell on their first day of trading in Hong Kong this month after selling shares at or near the bottom of proposed price ranges. Others such as Perfect Shape (PRC) Holdings Ltd. pulled offerings.
Private-Equity IPOs
IPOs by private-equity firms have also dried up this year, with owners instead pursuing secondary offerings. Last month, firms including Bain Capital LLC, Carlyle Group and Thomas H. Lee Partners LP raised $613 million from selling shares in Dunkin' Brands Group Inc., the doughnut chain they took public in July. This year, KKR & Co. (KKR) and other investors generated $2.1 billion from secondary offerings of stock in Dollar General Corp., whose IPO occurred in 2009.
Private-equity firms seeking to unravel investments made during the record buyout boom from 2005 to 2007 may follow through with IPOs if markets stabilize, said Robert H. McCooey Jr., senior vice president of new listings and capital markets at Nasdaq OMX Group Inc. in New York.
"Given the right market conditions, there will certainly be some of those companies that will be looking to exit into the public markets," McCooey said. Toys "R" Us Inc., backed by buyout firms including KKR, filed for an IPO in May 2010 and has yet to complete a sale.
Some technology companies have also held off. Travel- website operator Kayak Software Corp. filed plans for a $50 million IPO in November 2010. LivingSocial.com, which considered a $1 billion IPO earlier this year, instead chose to raise $400 million from private investors, people familiar with the matter said this month.
Hot Names
Many Web-focused companies that completed IPOs in 1999, such as EToys Inc. and Drkoop.com Inc., fell victim to the subsequent technology-stock collapse as shareholders abandoned the unprofitable ventures. The performance of new Internet stocks (RGUSTL) next year will show whether investors are ready to dive back into the Web, said Laurent Morel of Societe Generale SA.
"Technology IPOs are definitely the theme there, with lots of hot names like Zynga coming to the market," said Morel, the Paris-based global head of equity capital markets. "But if you look at their performance, most of them are struggling. Next year will be the real test."
4) Inspirational Quotes@Inspire_Us from Twitter
When you follow the dream in your heart, you're energised, inspired, & motivated. -Dr. John F. Demartini
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